PILOT agreement mulled for four-story medical office building in town of Ulster

TOWN OF ULSTER, N.Y. -- Local school officials and municipal governments are considering a payment-in-lieu-of-taxes agreement with a Hudson Valley real estate development firm that proposes constructing a four-story medical office building at the former Miron site in the town of Ulster.

"As you are no doubt aware, this site has been an eyesore for many years, and redevelopment will be a welcome (sight) to many," wrote Jeff Kane of Kirchhoff Medical Properties in a letter to Ulster County Industrial Development Agency Chairman David O'Halloran last month in a proposal for the 1561 Ulster Ave. (U.S. Route 9W) site, across from Adams Fairacre Farms.

Under a regular payment-in-lieu-of-taxes, or PILOT, agreement, property tax payments would start out at $28,885 in the first of 20 years of the deal, then after gradually rising to $31,266 in the fifth year of the agreement, jump to $170,085 and rise to $771,455 by year 20, for total payments of $7,744,269 over the life of the deal, according to an analysis prepared by Ulster Town Supervisor James Quigley.

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Industrial Development Agency and Kirchhoff officials are proposing what they call a "deviated PILOT" instead of a regular agreement.

Under the alternative arrangement, property tax payments would start out at $189,849 but would gradually rise to only $276,574 by the end of the 20-year agreement, for a total of $4,612,831 to be collected by the end of the deal.

Allen Olsen, the Kingston school district's assistant superintendent for business, told the school board that the dialogue among local government officials that tipped them toward the deviated PILOT centered on the fact that by the last five years of the traditional PILOT, the developer would likely challenge its assessment.

"Of course if they prevail in an assessment challenge, which we have many businesses that have been prevailing these days, this revenue that's forecasted in the last five years of the analysis will change dramatically," Olsen said. "Although the differences are in some ways stark here, the chances are the differences would be much smaller ... because of the kinds of the things that are likely to happen in the out years of this PILOT."

Ulster Town Assessor Jim Maloney told the school board the developer conservatively estimates 60 full-time jobs will be housed at the medical building.

Maloney said the agreement would cover only one building at the Miron site, and the developer may build a hotel, retail facility, bank, food service business as part of a broader long-term plan to redevelop the intersection.

"So this is only the first phase of a very, very exciting redevelopment of that entire parcel," Maloney said.

Several Kingston school board members expressed support for the agreement and are scheduled to vote on the deal at their Feb. 6 meeting.

"I drive by that piece of property at least three or four times per week," said Matthew McCoy, the board president. "It is awful. Something has needed to be done there for a long time. I can't even remember myself what was even there or when it was even operable. I would be in support of this."

CORRECTION posted 02-8-13: The proposed payment-in-lieu-of-taxes plan sought by Kirchoff Companies for the Mid Hudson Medical Group building on the former Miron site were for Kingston school taxes only and did not include either county or town taxes. If approved by the Ulster County Industrial Development Agency, the total for school district, town and county taxes at the end of 20 years would be $8.16 million for the modified plan, compared to $12.58 million under a standard payment plan.